Higher Education Fund Guidelines

Higher Education Funds (HEF) are provided to Texas Woman's University in accordance with Article VII, Section 17(a) of the Texas Constitution for Higher Education Institutions. Appropriated from General Revenue funds, the money resides in and must be expended from the State Treasury and are authorized for the following purposes:

Acquisition of land, with or without permanent improvements;
Construction and equipping of buildings or other permanent improvements;
Major repair or rehabilitation of buildings or other permanent improvements;
Acquisition of capital equipment, library books, and library materials; and,
Payment of principal and interest on bonds issued under this authority.

These guidelines cover the allocation, management, budgeting, expenditures, and related restrictions of these funds.

TWU General Ledger Structure

Accounts funded with HEF will have “11500” as the fund source (this is the second segment of the chart of account structure): xxx.11500.xxxxx.xxxxx.xxx.007xxxxxxx.

Definitions

Operating Expenses: Costs incurred for services or items with a useful life of less than one year.

Consumable Supplies: A category of operating expenses for items which likely will be consumed within one year. These are expensed, rather than being capitalized as assets. Some items may have an expected useful life of more than one year, but are of nominal value and are expensed. This would include paper products, toner, paper clips, pens, pencils, and other similar items.

Capital Equipment: Fixed or movable tangible assets to be used for operations, the benefits of which extend over more than one fiscal year.

Restrictions

HEF funds are to be used only for Educational and General (E&G) purposes and may not be used for:

Student housing
Intercollegiate athletics
Auxiliary enterprises

Note: In the case of building renovations used in part for auxiliary enterprises, HEF may be used proportionally for the Education and General portion of the building.

HEF funds may not be utilized for operating expenses or consumable supplies, except for when associated with the acquisition of capital expenditures.

HEF funds must be maintained in segregated HEF accounts and may not be co-mingled with non-HEF accounts.

Authorized HEF Expenditures

Acquisition of land, with or without permanent improvements

Land: The surface or crust of the earth which can be used to support structure and which may be used to grow crops, grass, shrubs, and trees.

Cost of land may include:

Purchase price
Commissions
Fees for examining and recording titles
Surveying
Appraisal costs
Drainage costs
Land clearing
Demolition of existing improvements (less salvage)
Landfilling
Grading
Interest on mortgages accrued at date of purchase
Accrued and unpaid taxes at the date of purchase
Other costs incurred in acquiring the land

Construction and equipping of buildings or other permanent improvements

The following definitions and guidelines apply:

Constructing and equipping: The process of erecting buildings and providing equipment to assure the buildings can be used for the purposes intended and the constructing and equipping of other permanent improvements. This category includes additions to and equipping of existing buildings. It does not include consumable supplies.

Buildings: Roofed structures (conventional or underground) that house operations. This category includes storage structures and additions to buildings meeting this definition.

Other permanent improvements: Assets that enhance the quality of land or buildings or facilitate the use of land or buildings. Permanency is relative and should be interpreted in terms of the periods of usefulness. Only land can be considered permanent in any absolute sense. (Examples: paving, lighting, fences, sewers, electrical distribution systems, water systems, sewer systems, landscaping, air conditioning, elevators, vent hoods, energy management systems, mechanical, plumbing, and electrical systems, voice-and-data systems, computing systems, and the like.) Note: Systems that in normal usage could be moved from building to building or from room to room are not considered permanent improvements.

Cost of buildings may include:

Original contract price or cost of construction
Expenses for remodeling, reconditioning, or altering a building to make it suitable for the purpose for which it was acquired
Payment of unpaid or accrued taxes on the building to the date of purchase
Cancellation or buy-out of existing leases
Other costs related to placing the asset into operation

Construction costs of buildings and other permanent improvements may include:

The completed project
Excavation, grading, or filing of land for a specific building
Preparation of plans, specifications, blueprints, etc.
Building permits
Architectural, Engineering, or Management fees for design and supervision
Legal fees
Temporary buildings used during construction
Drainage costs
Land clearing
Demolition of existing improvements
Maintenance agreements purchased as part of the original acquisition (such as those for software application programs and operation systems or for energy management systems)

Equipping costs may include:

Original contract or invoice of the furnishings or equipment
Freight-in, import duties, handling, and storage
Specific in-transit insurance
Sales, use, and other taxes imposed on the acquisition
Site preparation
Installation
Testing and preparation for use
Reconditioning used items when purchased
Maintenance agreements purchased as part of the original acquisition
Development of the software application programs and operating systems

Major repair or rehabilitation of buildings or other permanent improvements

May include the following categories:

Repairs
Renovations
Replacements
Improvements

These enhancements are normally expected to:

Extend the useful life in excess of one year
Improve operating efficiency
Eliminate health and safety hazards
Correct structural or mechanical defects
Upgrade the quality of existing facilities
Convert these assets to more useful functions

Acquisition of capital equipment, library books, and library materials

Capital equipment: Fixed or movable tangible assets which have a minimum value of $500 and a useful life greater than one year. Computer software operating systems and application programs are considered capital under this definition. Routine maintenance is not an allowable HEF expenditure. Equipment costs may include:

Original contract or invoice of the furnishings or equipment
Freight-in, import duties, handling, and storage costs
Specific in-transit insurance
Sales, use, and other taxes imposed on the acquisition
Site preparation costs
Installation and associated training costs
Costs for testing and preparation for use
Costs of reconditioning used items
Maintenance agreements purchased as part of the original acquisition
Development costs of computer software
Consumable items only when required for equipment start-up
Equipment parts if the parts materially extend or increase the useful life of an existing piece of equipment. HEF may also be used for the purchase of parts or accessories for incorporation into a newly purchased piece of equipment.
Purchase of or contract for cloud computing services or other intangible assets with an expected useful life or for a contract period of more than one year.

Library books: These acquisitions are allowed only from the TWU University Library.

Library materials: These acquisitions are allowed only from the TWU University Library.

Acquisition of controlled assets

Controlled assets: Assets of the state identified by the Comptroller’s office that must be secured and tracked in the State Property Accounting system. A controlled asset’s value is below the capitalization threshold and is not depreciated or reported on the balance sheet. Examples include sound systems, digital cameras, desktop computers, laptop computers, drones, firearms, smartphones, tablets and televisions. These items are HEF-eligible provided the proper purchasing procedures are followed.

Payment of principal and interest on bonds issued under this authority

See Article VII, Section 17(a) of the Texas Constitution for Higher Education Institutions for information related to the issuance of bonds under this authority.

Page last updated 2:37 PM, January 3, 2024